Inflationary pressures mean monetary policy must be tighter and more restrictive than it has been in the recent past. Higher for longer interest rates will be an important feature of a new regime in policy and market behaviour. The global
This report highlights the evolution of Chinese assets and investors’ allocations to the region. Observation 1 shows that investors outside China have low allocations to the country, with variations depending on their location and investment strategy. Chinese equities and bonds
March 2023 2022 was certainly a tumultuous time for investors. The year was dominated by the Federal Reserve’s actions to fight inflation, particularly given the widespread perception earlier in the year that it was behind the curve. US Core inflation stood
Strategic Research Unit Summary 3 The strong start to 2023 for emerging market (EM) equities faded in February. The China re-opening rally lost steam, and was exacerbated by re-escalation in US-China tensions. Meanwhile, more resilient US macroeconomic data raised the
For almost a century mutual funds have provided a simple and effective solution for investing: delegation to professionals, diversification through pooling of client assets, and security through a regulated legal structure. But times are changing, and so is the way
Economic and Strategy Viewpoint Q1 2023 Upgrade to global growth as developed markets hold up and China reopens. After what has felt like a constant period of negative economic shocks and forecast downgrades as the world has lurched from one
We maintain our neutral stance on equities as although peaking interest rates take some pressure off valuations, risks remain
In focus Cyber risk is one of the most immediate and financially material risks that organizations face today. Those that fail to implement robust management on cybersecurity may be less resilient in the long term. In this paper we undertake
We expect more active fiscal policy to be one aspect of a new regime in policy and market behaviour as governments attempt to alleviate the effects of higher inflation through tax and spend policies. This note explores the challenges and
Valuations continue to favour ex-US markets Summary Markets have rallied hard in early 2023, on relief at China re-opening and on expectations that there will be a softer economic landing than previously feared in the developed world (slide 9) Europe’s
After the recent rally and downward revisions to 2023 earnings expectations EM equities are no longer cheap on a forward P/E basis. The price-book ratio is close to its historical median. On a dividend yield basis, EM remains cheap versus
Schroders Economics Group produces thirty-year return forecasts on an annual basis, which incorporates the impact of climate change. This is Part 1 of our paper where we outline the methodology used to incorporate climate change into our return assumptions. In
Economic and Strategy Viewpoint The coming year is expected to be one of recession for the advanced economies with the eurozone now expected to join the US and UK in recording a fall in output for 2023 as a whole.
In 2020, our assumption started to incorporate the impact of climate change and the energy transition. Each year, we have developed the supporting analysis, and for this year’s update, our central case has moved to the Delayed Transition scenario following
It’s a gloomy time of year in more ways than one at the moment. Even the excitement of my recent move to a new house can’t distract from the literal and figurative darkness of January 2023. The war …
The macroeconomic backdrop, and regime shift, created a challenging environment for EM assets in 2022. Slowing economic growth, accelerating inflation, exacerbated by Russia’s invasion of Ukraine, and tighter global financial conditions were all headwinds. EM local and dollar debt both
The macroeconomic backdrop, and regime shift, created a challenging environment for EM assets in 2022. Slowing economic growth, accelerating inflation, exacerbated by Russia’s invasion of Ukraine, and tighter global financial conditions were all headwinds. EM local and dollar debt both
The Schroders Multi-Asset long-term capital market assumptions are forwardlooking estimates of total returns which are an important component for the team’s strategic asset allocation modelling and portfolio construction. This note presents our latest 10-year capital market returns forecasts in local
2022 summary: the combination of rising risk-free yields and wider spreads resulted in the worst year in IG credit since at least 1970s. History suggests a better …
Last year saw a reversal of many of the past decade’s trends: – the US (-19%) was one of the worst performing markets, the UK was one of the best (+7% in GBP, -5% in USD) (slides 10-11) – growth
Year-to-date, EMEA markets have taken a hit, while several Asian EM, including China, lag the index. Conversely, commodity-producing Latin American and Middle Eastern markets have been the top performers. After the recent rally, and downward revisions to 2023 earnings expectations,
European senior secured leveraged loans are a growing and integral part of the leveraged finance universe. They offer a 10% yield, have positive exposure to rising interest rates (unlike most fixed income), offer credit protections to manage downside risk, and
The coming year is expected to be one of recession for the advanced economies with the eurozone now expected to join the US and UK in recording a fall in output for 2023 as a whole. The emerging markets have
The world has woken up to the vital role that nature plays in supporting our economy and society. With more than half of our global GDP dependent on the natural world, 1 we believe that the reality is stark: nature
Credit spreads have narrowed again, especially in the US. Valuations remain more compelling in European credit. While US HY index spread has narrowed, lowest-rated CCC bonds are underperforming and dispersion between issuers is rising. Rising risk-free yields and wider spreads
Latin America is a region which has long offered promise for investors, but which has seen equity performance disappoint over the last decade. The share of Latin American markets in major equity indices over this period has shrunk, as investor
Schroders CIO Lens: At the beginning of the summer, I asked the question “are we there yet?”, in relation to whether it was time to start thinking about taking on more investment risk. The answer then was no. At that
The 2022 Schroders Institutional Investor Study confirms once again how European investors have made sustainability an integral part of their activity, ahead of the global average in the race to net zero, regulatory agenda, and commitment to their role in
This is very new for younger investors. Interest rates are rising at an alarming pace, as central banks admit that inflation is no longer just a series of transient shocks, but there is a risk that it becomes more ingrained.
Summary Hard currency emerging market debt (EMD): – Valuations vary: 1. The spreads of investment grade (IG) sovereign and IG corporate indices are close to their historical medians. High yield (HY) corporate index spreads have inched slightly above the historical
Global equities fell in Q2, extending year-to-date declines. The MSCI World Index returned -16.2% in Q2, taking the YTD fall to -20.5%. The market backdrop remained dominated by concerns over higher inflation, rising …
T o anyone who ever travels with children, the incessant question “are we nearly there yet?” will be a familiar refrain that punctuates any long distance car journey. It’s certainly a favourite of my seven-year old daughter. Now, I find
Inflation at levels not seen for 40 years. We expect the Federal Reserve (Fed) in the US to continue to tighten policy aggressively and further increase the federal funds rate target range.
Alongside the terrible human tragedy that has unfolded since Russia’s invasion of Ukraine, the war has also exaggerated many pre-existing trends. Some include the upward pressure on commodities and further disruptions to global supply gains at a time when inflationary
The peak in global inflation is probably not far away, but there are several reasons to think that it will fall relatively slowly. Lockdowns in China have caused bottlenecks in global supply chains to re-emerge, upside risks to commodity prices
For over two decades, the 60/40 equity-bond portfolio has served investors well as stock prices have risen and interest rates have fallen. However, the simultaneous sell-off in both asset classes this year has challenged this model. Looking ahead, we believe
Multi-Asset Investments Monthly views Given “stagflationary” concerns, our outlook remains cautious, with a preference for quality in developed markets. Stagflation describes a combination of slowing growth and accelerating inflation.
Economic and Strategy Viewpoint Q2 2022 – The peak in global inflation is probably not far away, but there are several reasons to think that it will fall relatively slowly. Lockdowns in China have caused bottlenecks in global supply chains
The urgent need for action on climate change and likely policy responces means that investors need to think about carbon in their portfolios. And they need to do so from multiple perspectives.
Schroders Recession Dashboard: what is it telling us? Deforestation: what could be the market impact of new EU ban? Which emerging markets are most at risk of defaulting on their overseas debts?
The urgent need for action on climate change means that investors need to think about carbon in their portfolios. And they need to do so from multiple perspectives. To help investors do this, we have developed a carbon framework.
Just before COP26, we wrote about what net zero means to those responsible for portfolios with multiple asset classes* . In this paper we address the practical aspects for asset owners and investors of getting on the decarbonisation path and
What does this mean for our portfolios? Firstly, let’s take the situation in Ukraine following Russia’s invasion. Above all there is the human perspective, which is tragic and horrifying. But our clients also need us to examine it from an
What does sustainability mean to you? We recognise that this can be an emotive topic and it is difficult to consolidate disparate sustainability concepts into one investable package. What we can do however is be clear in our objectives, encourage
In this paper, we argue that India offers an opportunity for investors because of its unique characteristics. On the macroeconomic side, India is on the course to become the most populous country in the world by the end of this
A public-private equity investment approach is one that combines public equity and private equity investments within the same portfolio. In recent years this has grown in scale globally, with several billion dollars raised for new and existing offerings; we believe
In focus The negative correlation between equities and bonds plays a key role in the construction of diversified portfolios. Yet its underlying drivers are not fully understood, leaving much uncertainty about what to expect going forward. Our research aims to
Dear investor, welcome to the inaugural edition of the CIO Lens. Each quarter we will bring you the views and opinions of our investment experts here at Schroders to help you navigate the challenging (and changing) investment times that we
China will be key to the growth outlook for emerging markets in 2022 …
Valuations vary 1. Investment grade (IG) sovereign and corporate spreads are well below historical medians 2. High yield (HY) spreads offer more value, especially in sovereign EMD where the dispersion between countries has increased
